Face it. Most people are lazy. When it comes time to renew our auto insurance, most of us simply buy the same coverage we had last year.

That’s a mistake.

Situations change, and you need to take that into account when renewing your insurance each year. Your finances may be in a little better shape so you need more protection. Your car may be older so it may need less coverage. You may have a new driver in the family.

Your circumstances are always changing, and many of those changes affect the type of coverage and the amount of coverage that you need. Don’t just take the easy way out. Spend a few minutes looking at your circumstances and needs and make an informed choice.

I often ask clients who have been victims of car wrecks what type of coverage they have. Most respond that they are “fully covered.”

What does that mean? Too often, people who tell me that they are “fully covered” aren’t fully covered. They usually only have the minimum liability limits required by law. But they think they’re “fully covered” because some agent told them that without explaining to them what it really means.

As I’ve mentioned earlier, when buying liability insurance to protect yourself from a claim made against you when you cause a wreck, you need to make sure you have adequate liability insurance. For most people, that means more than the $30,000.00 required by law.

Additionally, you need to buy personal injury protection and uninsured/underinsured motorist coverage to make sure that you’re protected when you or your family is injured in a wreck caused by someone else.

In my mind, you’re not “fully covered” until you have these types of insurance in sufficient amounts to cover a likely claim size given your circumstances.

Don’t just let the agent tell you you’re “fully covered.” Make the agent explain what the mean and how you’re being protected.

When you fill out your insurance application, you’re asked to provide a lot of information to your company. You may be asked about your driving history, how many miles you drive per month or year, your home address, where you park your car overnight, and more. Studies show that a significant number of people provide wrong information on their applications, usually in an effort to try and save a little money.

But these “mistakes” can often come back and bite those not being truthful. These mistakes could lead to insurers partially or completely invalidating the policy or completely cancel the policy, making it much more difficult and expensive to obtain insurance in the future.

The better plan is to be truthful on the application. In this case, honesty is the best policy.

If you’ve read the other mistakes, you know I think people spend too much time looking at price when deciding what insurance to buy. But I don’t think people spend enough time looking for discounts.

Once you have narrowed your search of insurers down to two or three respectable companies, do your homework to consider what discounts the companies offer. Most companies offer discounts for consolidating homeowners and auto insurance, but the discounts go far beyond that. Insurers may offer discounts for things like:

your car has daytime lights;

you’ve completed driver’s ed;

your driving age kids have good grades;

your kids are away for school; and

you or someone on your policy is deployed.

Make sure you ask your agent about potential discounts. You can also check the Texas Department of Insurance website, which lists discounts for many auto insurers.

If you pick the wrong insurance company, you increase the likelihood that you’ll end up fighting them if you ever need to make a claim. Similarly, if you cause an accident and hurt someone, having the wrong insurance company could increase the likelihood that you end up being sued.

Too many people end up with these problems because they didn’t do their homework up front. There are a number of things you can do to help you avoid these mistakes.

1. Check out the Texas Department of Insurance website (www.tdi.texas.gov). The website contains reports showing the number of verified complaints and the number of policies written by each insurance company.

2. Talk to friends who have had problems with insurance companies. Most people haven’t made claims on their policies. When talking around, you want to make sure and talk to friends who have actually been involved in claims — both those who have made claims against insurance companies and those who have been on the receiving end of claims. Ask about their experiences, the types of trouble they might have had, the length of time before the issue was resolved, and whether they would buy that insurance company.

3. Use the internet. Internet research is your friend when investigating insurance companies.

You see or hear many insurance companies saying that you can save money simply by switching insurance coverages. But prospective buyers shouldn’t just look at the price.

Usually, the price is lower because you’re not comparing the same products. The new insurance company may be offering lower limits, not selling you the same coverages, or excluding drivers who you may need covered.

You certainly don’t want to spend more than you have to, but you need to make sure you understand why the price differences exist.

Generally, when you buy auto insurance, the policy will cover you, your family, or anyone else who has permission to drive your vehicle. Thus, if you or your child or your best friend are driving and cause a wreck, the insurance will protect all of you. This is a big benefit. You never know when you might let someone borrow your car for something.
But today, many insurance companies are starting to offer policies that exclude drivers. It’s not unusual to see low cost companies have a long list of people who they don’t cover. Indeed, some new policies only provide coverage to those people specifically identified.

These kind of policies don’t provide near the protection that standard policies provide. And they affect you in ways that you might not imagine.

Recently, we represented a woman who was estranged from her husband. After they got back together, they were driving on a road trip. Because she was getting tired, she let her husband driver her car. While the husband was driving, they were in a serious wreck caused by an underinsured driver.

We settled the claim against the other driver and then pursued a claim against her underinsured driver coverage. But the UIM carrier denied the claim because the husband, who was estranged when the policy was purchased, was specifically excluded under the policy. Even though who was driving made no difference in whether the wreck would occur or how it occurred, the fact that the driver was excluded deprived my client of her needed benefits.

When you’re purchasing your insurance, make sure you understand the true implications of potentially excluded drivers.

Many people who purchase insurance only purchase the liability insurance required by law. As a result, you spend a lot of money on this insurance protecting other people.

But you are making a mistake if you’re not protecting your family through the purchase uninsured/underinsured motorist coverage and personal injury protection insurance.

On an almost monthly basis, I have to break bad news to potential clients that there isn’t anything I can do to help them because the driver who caused the wreck either didn’t have any insurance or didn’t have enough insurance.

Uninsureed/underinsured motorist coverage is relatively inexpensive and provide significant protection to you and your family.

The same may be said for personal injury protection insurance. This coverage is relatively inexpensive, but it can provide big benefits to you. If you’re in a wreck and have to make a claim against the other driver or even your own uninsured/underinsured motorist carrier, those claims take a long time. It may be months (or even years) before the case is resolved and you see anything from the case. PIP allows you to obtain funds almost immediately, to help pay for your medical expenses or to help with other living expenses.

Don’t make this mistake. Buy the coverages necessary to protect you and your family.

Most people think they only need to purchase the minimum insurance required by Texas law. This is a huge mistake.

Generally, the more assets you have, the higher insurance you should purchase to make sure you’re protecting you and your assets. But most people should consider purchasing significantly more than the minimum limits.

For property damage, the minimum required by the law is $25,000.00. But today, the average new car costs over $30,000.00, and the prices go much higher than that. If you are just purchasing the minimum limits, you are still leaving yourself exposed to significant liability should something happen.

Similarly, for personal injury claims, the minimum coverage is $30,000.00. That might sound like a lot. But when considering the cost of health care, that’s a small amount. Whether you’re talking about liability insurance, protecting you against someone else’s claim, or uninsured/underinsured, protecting you and your family, a simple hospital visit might exceed that cost. In that instance, by purchasing the minimum limits, you will have done a good job protecting the hospital or your health insurance company, but you won’t have done a good job protecting yourself.

People’s situations differ, but I generally recommend people purchase at least $100,000/$300,000 for personal injury claims and $50,000 for property damage claims for both liability and uninsured/underinsured motorist coverage. However, many people will be in a position where I’ll recommend much higher amounts.

Medical payments, or MedPay, is similar to PIP. However, MedPay only pays for medical expenses (and not lost earnings). The other significant difference is that MedPay does have a subrogation interest. If you’re in a wreck and make a recovery against another party who caused the wreck, then you would have to reimburse your insurance company for any MedPay the company paid you.

All in all, MedPay is often priced very similar to PIP, but MedPay is a much inferior product. We recommend to our friends and family members that they purchase PIP instead of MedPay.